Unemployment Numbers Don’t Tell the Whole Truth

Today’s lower unemployment numbers have the NYTimes saying it’s signaling a shift in the economy and the White House is calling the job report good news for the economy.

But where is this “shift” coming from?

The Bureau of Labor Statistics Employment Situation for July 2009 showed the following jobs data:

The number of long-term unemployed (those jobless for 27 weeks or more)
rose by 584,000 over the month to 5.0 million.

The number of persons working part time for economic reasons (sometimes
referred to as involuntary part-time workers) was little changed in July
at 8.8 million.
Total nonfarm payroll employment declined by 247,000
Employment in construction declined by 76,000
Manufacturing employment fell by 52,000
retail trade employment declined by 44,000
Employment in professional and business services continued to trend
down in July (-38,000)
Transportation and warehousing lost 22,000 jobs
Financial activities employment continued to trend down in July (-13,000)
Health care employment increased by 20,000

Face the facts, these numbers aren’t good.  Only Health care employment went up.  We’re not producing more as a nation.  We’re primarily s service based economy and our manufacturing base is going the route of the VCR.  The economy is still in shambles.  Yet the DOW is up 170 points on this news (as I type) to 9426.  WHY? Where was the real improvement in the economy?

Outside of some government programs like cash for clunkers, infrastructure projects, military projects and the phenomenon known as the iPhone, where is the production coming from?   What from an economic standpoint is going to sustain these “green shoots?”  What is really supporting this stock market but economic fluff from the result of short term shenanigans?

Government Jobs

When government steps in and creates jobs for individuals it either comes from the taxing of your hard earned labor, or deficit spending (and lately what government calls “stimulus” spending).

Government is essentially U.S. taxpayers.  It is your labor that is paying for the cost of government jobs that reduces the amount that you can spend on other goods and services.  This tax money taken from you could have gone towards the employment of those producing those “other goods and services.”  Instead, these individuals never get a chance to produce and stay unemployed because government has taken this opportunity from them.

Our Nation Is Becoming Too Reliant on Government

Before the 08 crisis hit, the following shows how much government employment we have had compared to all other employment (and before most of the private industry job losses were upon us):

Government employs 22,387,000 Americans                                 Manufacturing 13,643,000
Leisure and hospitality employs 13,682,000 Americans. There are as many waitresses and bartenders as production workers.
Wholesale and retail trade employ 21,467,000 Americans.
Professional and business services employ 18,036,000 Americans, of which 8,368,000 are in administrative and waste services.
Education and health services employ 18,699,000 Americans.
Financial activities employ 8,228,000 Americans.
The information sector employs 3,010,000.
Transportation and warehousing employ 4,532,000.
Construction employs 7,338,000.
Natural resources, mining and logging employ 751,000.
Other services such as repair, laundry and membership associations employ 5,516,000 Americans.

Since this time, we’ve seen a drop of over 6 million jobs, but how many people do you know who have lost their government jobs?

Where do you find government cutting back?  Sure there are some states like California that are being forced to cut back, but you can bet that governments will always try and take care of their own before having any concern for its citizens.  California for example tried to pass new propositions to support their spending ways via higher taxes.  But this blatant attempt failed.

Our elected officials goal is to keep growing government and get the People to rely on them for everything when it is government itself that is the problem.

The individuals in congress who fight for less government you can count on one hand.  Republicans are preaching against the current administrations socialistic, big government behavior but were silent during the Bush administration spending spree.

Government is feeding upon itself and growing larger and larger.  The consequences of this can’t be good.  Unemployment for the private sector will be the ones who suffer.  Inflation will return.  Your taxes will increase.

Voting the same way your parents did isn’t the answer.  Something has to change.  The political parties won’t change their stripes.  The People have to.  I’ll be posting more on this in the weeks ahead.

But think about the following graph in the meantime.  Are we going the route of Sweden, France, Denmark and Norway?  The numbers from the following chart will just get worse.

UPDATE: It is known by some, but not by many that the government over the years has changed the way it counts the unemployed.  I subscribe to Shadow Government Statistics and John Williams has the unemployment number at 20.6% utilizing the old methods of calculation.  There is a good explanation of this here.
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About Doug Eberhardt

Doug Eberhardt is a 28 year financial services veteran and precious metals broker selling gold and silver at 1% over wholesale cost. Doug has written a book to help investors understand how gold and silver fit into a diversified portfolio, how to buy gold and silver, and what metals to buy. The book; “Buy Gold and Silver Safely” is available by clicking here Contact phone number for Buy Gold and Silver Safely is 888-604-6534


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